Code Section Group

Government Code - GOV

TITLE 1. GENERAL [25 - 680.4]

  ( Title 1 enacted by Stats. 1943, Ch. 134. )

DIVISION 7. MISCELLANEOUS [6000 - 7599.2]

  ( Division 7 enacted by Stats. 1943, Ch. 134. )

CHAPTER 11.5. Governmental Investors [6930 - 6934]
  ( Chapter 11.5 added by Stats. 1990, Ch. 709, Sec. 1. )

6930.
  

As used in this chapter:

(a) “Governmental investor” means the Treasurer, the Teachers’ Retirement Board, and the Board of Administration of the Public Employees’ Retirement System. “Governmental investor” also means each county treasurer, each city treasurer, each public governing or investing body or public investing officer, who exercises investment discretion over public funds in excess of ten million dollars ($10,000,000) or over public pension or retirement funds in excess of ten million dollars ($10,000,000).

(b) “Soft dollar and directed brokerage arrangements” means the brokerage and research services described by Section 28 (e) of the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78bb(e)).

(c) “Transaction cost” means the overall cost of the transaction, including, but not limited to, commissions, services, and the price of the securities.

(d) “Responsible” means with the due diligence required of a fiduciary to examine a presented transaction for: necessity of soft dollar services provided and for commission cost; quality of the trade; quality of the broker-dealer’s research; the broker-dealer’s execution capabilities; and the broker-dealer’s quality of service.

(Added by Stats. 1990, Ch. 709, Sec. 1.)

6931.
  

Each securities transaction or brokerage agreement carried out for a governmental investor pursuant to a soft dollar and directed brokerage arrangement, as defined in subdivision (b) of Section 6930, shall be executed at the lowest responsible transaction cost available.

(Added by Stats. 1990, Ch. 709, Sec. 1.)

6932.
  

Any written contract entered into between a governmental investor and an investment manager on or after January 1, 1991, for the management of assets of a public fund or a public pension or retirement fund, which includes a soft dollar and directed brokerage arrangement, shall contain the following requirements:

(a) The investment manager shall maintain complete and detailed records of all billed services provided pursuant to soft dollar and directed brokerage arrangements.

(b) The services which may be provided by a broker-dealer pursuant to soft dollar and directed brokerage arrangements shall be clearly defined.

(c) The investment manager shall, in the customer agreement letters with governmental investors, disclose:

(1) A list of all billed services provided pursuant to soft dollar and directed brokerage arrangements with respect to investment transactions for the governmental investor.

(2) The justification for providing each of those services.

(3) The maximum percentage of the investment transactions of the governmental investor planned for use in soft dollar and directed brokerage arrangements.

(4) An annual statement of all billed services provided during the previous year under soft dollar and directed brokerage arrangements with respect to investment transactions for the governmental investor.

(5) A determination of whether each service provided under soft dollar and directed brokerage arrangements with respect to investment transactions for the governmental investor is proprietary or is being shared by other clients of the investment manager.

(Added by Stats. 1990, Ch. 709, Sec. 1.)

6933.
  

Soft dollar and directed brokerage arrangements are not subject to any statutory competitive bidding requirements.

This section does not constitute a change in, but is declaratory of, existing law.

(Added by Stats. 1990, Ch. 709, Sec. 1.)

6934.
  

This chapter shall apply to contracts entered into, renewed, or extended on and after January 1, 1991.

(Added by Stats. 1990, Ch. 709, Sec. 1.)

GOVGovernment Code - GOV